Markets & Finance

Karen residents get Sh4bn high end shopping mall

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Garden City project under way on Thika Road. The mall is set to be the largest in East and Central Africa. FILE

The affluent Karen neighbourhood is set to get a mega Sh4 billion shopping mall that on completion will be Kenya’s second biggest after Thika Road’s Garden City.

The shopping mall, whose construction started in July, will sit on a 20-acre land near the Karen shopping centre.

The commercial complex will comprise specialist shops, a “green supermarket”, 2,000 square metres central open space (community and social space), a blend of leisure options such as cinema, gym, spa, jogging track, lake with fishing activities, orchid garden and extensive green areas, amphitheater, over 1,000 vehicle parking slots “among others,” according to documents seen by the Business Daily.

A consortium of investors called Azalea Holdings is behind the project dubbed the Hub Karen.

“The Hub Karen is a two phase project, with the completion of phase one estimated by the third quarter of 2015. The first phase will offer 30,000 square meters of gross leasable area on two levels of retail,” said the firm in a statement.

The second phase is planned for completion in 2018.

The investors have lined up mix of debt and equity to finance the project. Its estimated size and the project value makes it one of the biggest shopping malls in Nairobi.

The first phase, which will be 30,000 square metres of available space, is equivalent to Sarit Centre and is larger than the Junction Mall which measures 26,000 square meters. It will also sit on bigger land than the nearby Galleria Mall’s 12 acres.

The first phase is also nearly as big as the Garden City Mall’s first phase which will cover 35,800 square metres. Garden City, which is being developed by private equity firm Actis, is set to be the largest shopping mall is East and Central Africa and will occupy 50,000 square meters.

Azalea did not mention the size of the second phase.

The Hub is targeting to be the centre for Karen area of Nairobi and is also targeting foreign visitors.

“Being close to the southern bypass it is easily accessible for both international and domestic tourists and brings a new dynamism to the area, positively impacting the community infrastructure,” said developers.

Knight Frank, the leasing agent for the Karen Hub said that despite the increase in the number of large shopping malls, demand for space is growing due to the growing mall culture and an unforeseen shortage.

Knight Frank chief executive Ben Woodhams said that the Westgate Mall terrorist attack of September 21 had created demand from retailers who want to replace outlets that were big revenue drivers.

“Following the Westgate attack there are many tenants who are looking for new outlets,” said Mr Woodhams.

Westgate Mall had 30,000 square metres and housed large retailers such as Nakumatt and chains such as Art Café who said that the attack destroyed their key outlets.

Property managers have also said that investors have shown interest in retail space since it attracts higher rental yields than office, residential and industrial properties.

Data from Broll, a South African property management firm, says that in 2012 retail space attracted rent of up to $35 (Sh3,060) per square meter, higher than an equivalent office space which attracted rent of between $15 (Sh1,311) and $9(Sh787), while industrial space fetched the least at between $4.50 (Sh393) and $3(Sh262) per square metre.

These rates are attracting international investors. Stanlib, the asset management arm of South Africa’s Liberty Group, had previously said that it planned to invest as much as Sh5.2 billion in developing shopping malls in Kenya within the next two years.

Azalea Holdings’ environmental impact assessment to the National Environment Management Authority says in April says that the project will also include infrastructure that supports outdoor activities.